Insurers in bind as medical advances push up claims

Advances in medical technology are resulting in higher health insurance claims, with some treatments seeing a 50% jump in costs due to new procedures.

Policy holders are opting for new procedures that are less painful and ensure faster recovery but cost substantially more. Take the case of coronary stent implants. Traditional metallic stents cost around Rs 40,000 on average. These were followed by drugeluting stents. These are superior to metal stents as they release medicines which prevent complications, but cost Rs 1.5 lakh on average. But even they have now been overtaken by biodegradable stents, which cost above Rs 3 lakh each.

According to Sanjay Datta, head, claims and underwriting at ICICI Lombard, procedures are normally accepted if they are proven to be the safer option and are not at the trial stage. "Treatment costs have gone up by 50–60% in some cases such as arthritis and brain stroke. Several otherailments such as spinal cord disorders, heart stroke, and hip and thigh fracture have witnessed an increaseof 25 to 50% in treatment costs," he said.

The challenge for insurers is in determining which procedures to admit, as some of them cost double for the same outcome but use less invasive methods. In other fields, cutting–edge technology is used by those who can afford it. However, in the case of health insurance it is available to all. The dilemma for insurers is whether to admit these claims and push up the cost of health insurance for all or to ask claimants to meet part of the cost.

"The costs of robotic surgery on average are 25–35% higher than conventional surgery," said Suresh Sugathan, head of health at Bajaj Allianz General Insurance. What typically happens is that the doctor offers the patient a choice between a traditional option and a new superior technique. Often, the patient does not know whether it is necessary and chooses the advanced option. According to Sugathan, in cases of group policies it is possible to negotiate with the company whether tohave a copay scheme where the claimant pays part of high–tech procedure costs.

According to Segar Sampathkumar, head of health insurance at New India Assurance, insurers decide on paying claims using the definition of "reasonable and customary charges" and "medically necessary". "We will accept a cyber–knife treatmentfor prostratecancer but will not pay for balloon sinusplasty over functional endoscopicsinussurgery (FESS) treatment."

The cyber knife delivers high beams of strong radiation to tumours with pinpoint accuracy that is not possible with conventional radiation treatment. Sampathkumar adds that merely being allowed to go home from hospital a day early should not be grounds for paying double the amount for the same outcome.

"I would not like to say that technology or medical advanceisthesolecontributor to medical inflation. But indiscriminate utilization is sometimes prescribed to recover the capital cost of the equipment," says Shreeraj Deshpande, head of health insurance atFutureGenerali Insurance. He addsthatwhile procedures such as robotic surgery might be warranted in some cases where precision is required, it need not be used in allcases merely becauseitis less invasive.

An official in a public sector insurance company said one of the criteria applied in settling claims is whether the charges arewaybeyondindustry averages. "If the average industry claim for an ailment is Rs 50,000 and the claimant has opted for a procedure which is costing Rs 80,000, we will not pay," said the officer.

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